11 March 2014
Hansteen Holdings PLC
(“Hansteen” or the “Group” or the “Company”)
Full Year Results
Hansteen Holdings PLC (LSE: HSTN), the investor in UK and continental European industrial property,
announces its full year results for the year ended 31 December 2013.
Financial Highlights
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Normalised Income Profit increased by 28% to £39.4 million (2012: £30.8 million)
Normalised Total Profit increased by 35% to £46.3 million (2012: £34.3 million)
IFRS profit before tax increased by 41% to £65.3 million (2012: £46.2 million)
Normalised Income Profit per share, increased by 28% to 6.2p (2012: 4.8p)
Diluted EPRA earnings per share increased by 6% to 5.0p (2012: 4.7p)
Full year dividend increased by 7% to 4.8p per share (2012: 4.5p per share)
EPRA NAV per share increased by 9% to 91p (31 December 2012: 83p)
Net debt to property value ratio of 49.3% (31 December 2012: 38.6%)
Two new five year loans totalling €343 million secured against German property announced on 4
March 2014
Operational Highlights
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Total portfolio owned or co-owned increased by 53% to £1.5 billion (2012: £1.0 billion)
Annualised rent roll from total portfolio up 59% to £134.9 million (2012: £84.7 million)
46 sales of £159.6 million with a total profit of £10.0 million
£53 million investment in the Ashtenne Industrial Fund and contract to manage the Fund
£91.1 million of properties acquired (excluding the stake in AIF) at an average yield of 10.3% and a
vacancy of 21.0%
Like-for-like occupancy improvement of 104,000 sq m or 22.2% of vacancy at the start of the year
Property valuation increase across the total portfolio of 3.2% (£46.9 million)
Launch of the second co-investment fund (HPUTII)
Issue of €100 million convertible bond with 4% coupon and five year maturity
€41.7 million acquisition of an impaired loan on HBI Netherlands portfolio at a 51% discount to face
value
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See note 3 of the financial statements for a reconciliation of Normalised Income Profit and Normalised Total
Profit to the IFRS measure of profit before tax.

Operational Highlights relate to property, owned and managed, of Hansteen and its associated funds.
James Hambro, Chairman, commented: “We believe that from Hansteen’s perspective the property
investment market this year is likely to exhibit two strong themes across all the European regions in which we
operate. First, recognition by investors that higher yielding regional industrial property should produce
superior returns over the next couple of years and second, an appreciation by investors that in order to
achieve those returns industrial property requires intensive and specialist management. We have an
extensive network of regional offices across our European regions manned by experienced, energetic and
incentivised locals with a proven track record of creating value for shareholders.
There are few equivalent platforms to Hansteen’s in the high yielding property sector. The combination of a
large high yielding portfolio with opportunities to add value and an improving investment market means that
we look forward to the remainder of 2014 with confidence."
Ian Watson and Morgan Jones, Joint Chief Executives, added: “The second half of 2013 saw the investment
and funding markets change significantly for the better, following five years of decline and poor liquidity. This
is particularly true in the UK with growing signs that the investment market in Germany will follow a similar
path, in time. At the same time, in each of our regions the occupational market is improving. Having focused
on buying properties with vacancies the combination of our successful asset management and the improving
markets means that despite showing value growth in 2013 the yield of our portfolio was higher in December
2013 than it was in December 2012. Furthermore, although we have materially improved occupancy levels
there is still a significant vacant element with the potential to add both income and value. Accordingly, we
are well positioned to benefit from improving market backdrop and expect 2014 to be a very active and
successful one for Hansteen.”
For more information:
Morgan Jones/Ian Watson
Hansteen Holdings PLC
Tel: 020 7408 7000
Jeremy Carey/ Faye Walters
Tavistock Communications
Tel: 020 7920 3150
jcarey@tavistock.co.uk
Notes to Editors:
HANSTEEN HOLDINGS PLC
Hansteen Holdings PLC (LSE: HSTN) is a European industrial REIT that invests in properties with high yields,
low capital costs and opportunity for value improvement across the Netherlands, Germany, Belgium, France
and the UK.
Founded by Morgan Jones and Ian Watson, the Company listed on Aim in November 2005 raising £125
million. In 2009, it raised a further £200.8 million by way of a Placing and Open Offer and moved to the
Official List, converting to a REIT shortly thereafter. In April 2011, the Company raised a further £150 million
by way of a Placing and Open Offer.
At 31 December 2013, Hansteen had total property under management of some 592 assets with a value of
£1.5 billion.
Chairman’s Review
I am pleased to present the results for the year ended 31 December 2013 and the Company’s Strategic Report.
Results and dividend
2013 was a record year for Hansteen in terms of profits and value growth. During the year we made some
significant acquisitions, a large number of profitable sales, increases in rental income and improved
occupancy. One of the highlights was the acquisition of 27.5% of the Ashtenne Industrial Fund at a discount to
NAV and the transfer of the management to Hansteen. The business model and strategy have continued to
work well and as a result we can report increased profits, growth in NAV and an increased dividend. After
adding back the dividends, the total NAV return for 2013 was 15.0% (2012: 7.0%) and the total shareholder
return was 40.8% (2012: 7.9%).
Normalised Total Profit for the year to 31 December 2013 increased by 35.0% to £46.3 million (2012: £34.3
million). Normalised Income Profit, which excludes profits or losses from the sale of properties (i.e. essentially
the repeatable earnings of the business), increased by 27.6% to £39.4 million (2012: £30.8 million).
Normalised Income Profit per share increased by 27.6% to 6.2p (2012: 4.8p). This is the eighth consecutive
year in which Hansteen’s normalised profits have increased.
Basic earnings per share were 9.1p (2012: 6.2p) and diluted EPRA earnings per share in 2013 were 5.0p (2012:
4.7p). Profit before tax increased by 41.4% to £65.3 million (2012: £46.2 million).
The Group’s EPRA Net Asset Value was 91p per share (2012: 83p), an increase of 9%. This compares to an
average cost per share of 86p for an investor who purchased shares at flotation and at every subsequent fund
raising. In addition to the NAV growth, Hansteen has paid a total of 26.5p of dividends per share since
flotation.
Good progress was made on the policy of diversifying the Group’s funding sources. During the year we issued
a Euro convertible bond with a 4% coupon and a five year maturity; and following the end of the year, we
announced terms for the re-financings of both of our bank facilities in Germany with lenders new to
Hansteen. On 4 March 2014, the completion of two new five year loans was announced; a €235 million loan
with a consortium of German banks at an average interest rate of 3.5% and a €108 million loan from HSBC at
an average interest rate of 2.9%.
The Board recognises the importance of dividends to our shareholders and remains committed to a prudently
progressive dividend policy reflecting the strong and growing cash flow generated by the business.
Accordingly, the Board increased the interim dividend paid on 21 November 2013 by 5.6% to 1.9p per share
(November 2012: 1.8p per share) and will pay a second interim dividend, increased by 7.4% to 2.9p per share
(May 2013: 2.7p). This dividend is payable on 21 May 2014 to shareholders on the register at the close of
business on 26 April 2014. A Property Income Distribution of 0.4p is included in this second interim dividend
payment.
The total dividend of 4.8p per share (2012: 4.5p) is a 6.7% increase on 2012. Hansteen has paid a covered
dividend every year since the first dividend distribution in 2006 and during that period, the dividend has
increased by 60.0%.
Our business
Hansteen is a leading owner and asset manager of European industrial property, primarily in Germany and
the UK. The Group buys undervalued portfolios, often with high levels of vacancy or other tangible
opportunities to add value, applies an intensive programme of improvement using its local management
teams and sells to realise the value added.
Our core mission is to provide investors with consistent, high and realised returns.
Our strategy
Our strategy is achieved through the methodical and detailed assessment of investment opportunities in the
UK and Continental Europe. We look for investments that will create a high yielding industrial property
portfolio as well as other more opportunistic and management intensive acquisitions which, although lower
yielding, will provide greater potential for capital growth. We seek to produce sustainable growth in our
rental income and occupancy through active asset management initiatives which should lead to increased
values. We aim to realise and distribute these profits to our shareholders over the property cycle.
We generate shareholder value by:
 Disciplined investment
We pick our investments based on a thorough assessment of the opportunities in order to create a
high yielding portfolio with potential to add value. Our balance sheet is strong and we remain
committed to financing on a prudent basis.
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Diverse portfolio
Our properties have a wide range of tenants and are in several European countries, primarily in
Germany and the UK. None of our 6,000 tenants accounts for more than 1.5% of the annual rent roll.
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Industry expertise
Our people are at the centre of our success. We have 14 offices with experienced management teams
across the UK and our regions in Continental Europe. We work hard at creating the right relationships
with our stakeholders so that we are in the prime position to act when opportunities arise.
Board changes
At the end of 2013, Stephen Gee gave notice of his intention to retire as a Non-Executive Director in 2014.
Stephen has been a member of the Board since Hansteen was formed in 2005 and on behalf of the Board and
the whole Company I would like to thank him for his substantial contribution and commitment to Hansteen's
growth and success. The selection process to find Stephen's replacement and one additional Non-Executive
Director to join the Board has commenced and is ongoing.
Outlook
Since flotation in November 2005, Hansteen has assembled a property portfolio of £1.5 billion, the majority
of which was purchased from forced sellers in a distressed market. Although the downturn in the property
market has been deeper and more prolonged than could reasonably have been foreseen, we have ensured
that our acquisitions represent good value and are prudently financed. The strategy of building the portfolio
at the bottom of the cycle is starting to show clear signs of success as the market is improving and higher
income properties are gaining in value. Our Interim Report confirmed that improvement was gathering
momentum and the pace and strength of the recovery in the UK industrial investment market in the fourth
quarter of 2013 has in fact exceeded most projections.
The Board believes that the property investment market in 2014 is likely to exhibit two strong themes that
will benefit Hansteen across all the European regions in which the Group operates. Firstly, recognition by
investors that higher yielding regional industrial property should produce superior returns over the next
couple of years and, secondly, that in order to achieve those returns industrial property requires specialist
management.
There are few equivalent platforms in the high-yielding property sector. The combination of that platform, a
large, high-yielding portfolio with value-add opportunities and an improving investment market means that
the Board looks forward to 2014 with confidence.
Jamie Hambro
Chairman
10 March 2014
Joint Chief Executives’ Review and Finance Report
Our business model remains unchanged and is based on two key strengths: an entrepreneurial and
opportunistic approach to buying and selling property, funding and deal structuring; and a focussed,
disciplined and skilled asset management and marketing platform. We believe that acquiring the right property
at the right price is key to the success of the business and that high yielding industrial properties with
opportunities to add value have historically performed strongly. Whilst selling has been limited in recent years,
2013 has provided improved selling conditions with increased liquidity in the market, particularly in the UK.
Typically we sell after the business plan for each property has been implemented in order to crystallise the
value that has been added. The £159.6 million of sales have realised £10.0 million of profit and released capital
for reinvestment elsewhere.
Key Performance Indicators (“KPIs”)
Financial KPIs
In our view returns are best measured by looking at realised profits and valuation growth. We believe these
measures are best reflected by the following:
Normalised Total Profit for the year to 31 December 2013 increased by 35.0% to £46.3 million (2012: £34.3
million). Normalised Income Profit, which excludes profits or losses from the sale of properties (i.e. essentially
the repeatable earnings of the business), increased by 27.6% to £39.4 million (2012: £30.8 million). This is the
eighth consecutive year in which Hansteen’s Normalised Income Profit has increased. Normalised Income
Profit per share increased by 27.6% to 6.2p (2012: 4.8p).
The table below sets out the results for Normalised Income Profit and Normalised Total Profit including our
share of associates.
2013
2012
£’000
£’000
Investment property rental income
86,844
71,306
Direct operating expenses
(13,754)
(12,342)
Property management fees
3,179
1,719
Administrative expenses
(17,939)
(15,196)
Net interest payable
(18,978)
(14,645)
Normalised Income Profit
39,352
30,842
Profit on sale of investment properties
5,631
1,005
Profit on sale of trading properties
26
610
Profit on sale of subsidiary
1,308
56
Direct costs relating to trading properties
(45)
(50)
Total profits on sale of investment and trading properties
6,920
1,621
Other operating income
61
1,799
Normalised Total Profit
46,333
34,262
Dividends payable relating to the year
30,712
28,747
The Group’s EPRA Net Asset Value was 91p per share (2012: 83p), an increase of 9%. Dividend per share 4.8p
(2012: 4.5p), an increase of 6.7%.
Property KPIs
On our wholly owned portfolio the annualised rental income at 31 December 2013 increased to £73.5 million
(2012: £71.8 million). Despite the fact that on a like-for-like basis the portfolio showed a valuation increase of
£12.6 million the yield of the wholly owned portfolio increased to 8.6% (2012: 8.5%). Occupancy of the wholly
owned portfolio increased to 84.6% (2012: 82.3%).
As the business has more fully deployed its balance sheet, net debt to value has increased to 49.3% (2012:
38.6%). There is further analysis of some of these numbers on a like-for-like basis later in this review.
Significant transactions
AIF
One of the most significant transactions during the year was announced in August 2013 with the £53 million
acquisition of a 27.5% stake in the Ashtenne Industrial Fund (“AIF”). This was the culmination of a complex
series of moves including the subscription of £42.5 million of new units and the acquisition of the 6.9% stake
held by Warner Estate Holdings PLC and controlled by Warner’s banks. This resulted overall in a purchase at a
22% discount to AIF’s September 2013 NAV. This acquisition discount contributed £16.1 million of immediate
value to Hansteen. From an earnings perspective, the £53 million investment is expected to generate an
initial annual profit contribution of around 10%.
In addition to its investment return, Hansteen has become the asset manager of AIF and will receive asset
management fees of approximately £3.0 million per annum as well as a potential performance fee following
the signing of a new asset management contract.
During the period since Hansteen has taken management responsibility, there have been a number of
successful initiatives resulting in increased rent of £0.7 million per annum and a valuation increase of £26.5
million or 5.8%, the first valuation uplift in AIF in 13 quarters.
HPUT II
In May 2013, we announced the launch of a second UK industrial property fund, Hansteen UK Industrial
Property Unit Trust II (‘HPUTII’ or the ‘Fund’). The Fund was launched with £107 million of equity, one third
provided by Hansteen and two thirds from clients of Aviva Investors Real Estate Multi-managers (REMM).
HPUTII has the capacity to invest up to £200 million in UK industrial property and at 31 December 2013 had
invested £75.6 million. The life of the Fund will be six years and with initial targeted returns of 12 to 15% per
annum, has had a good start with a 2013 return of approximately 15%.
As founder, core investor and asset manager of HPUTII, we will receive an asset management fee, a potential
performance fee and the return on our investment.
HBI Loan Acquisition
The most recent transaction of 2013 was announced in late December with the purchase from UniCredit Bank
AG of 50% of a loan secured against a portfolio of mainly multi-let light industrial property in the Netherlands.
The other 50% of the loan is held by ING. The €41.7 million paid to UniCredit represents a 51% discount to the
face value of the loan and was satisfied from existing cash resources. The current borrower, Lancelot Land BV,
is in breach of the loan and it is our intention to work with ING over time to crystallise the value inherent in
the loans.
The whole portfolio, against which the loan is secured, extends to more than 370,000 sq m across 40 good
quality industrial estates, with the majority in the core Randstad area of the Netherlands. The gross annual
rental income of the portfolio is more than €15.0 million and the current vacancy rate is approximately 20%.
We believe that there is a significant opportunity to add value as the purchase price is at a discount to both
the value of the loan and the underlying properties.
We believe that this acquisition will prove to have taken place at around the low point in the Netherlands
property cycle.
Convertible Bond
In July, Hansteen issued €100 million five-year Convertible Bonds. These are loan instruments secured on the
financial strength of the Company rather than on properties, like our bank debt. Embedded in the Bonds is an
option for the Bond holders to convert their Bonds into Hansteen’s ordinary shares in the future at a
premium to the share price at the date of the Bond issue.
The benefit to Hansteen of such an arrangement is that the Group has a flexible, unsecured loan at a
competitive interest rate (4% per annum). If the shares perform well the Bonds will not have to be repaid and
will convert into Hansteen shares. Whether or not the Bonds convert, they will have provided finance on
better terms than could have been secured by way of an equity issue or bank debt at the time.
The initial conversion price was set at 99p per share, which represented a premium of 22.5% above the then
share price. The conversion price is expected to reduce over the five years depending on the level of
dividends.
Under IFRS the Bonds are accounted for by making a charge to the income statement to reflect the current
market price of the Bonds. At 31 December 2013 this mark-to-market adjustment included in the income
statement and the balance sheet was £16.2 million. EPRA earnings, EPRA NAV and our net debt ratio exclude
the mark-to-market adjustment.
German Refinancing
During 2013, we made significant progress towards refinancing the existing €310.6 million bank loans secured
on the German portfolio. In February 2014, both the HBOS facility which was due to expire in October 2014
and the UniCredit facility which was due to expire in February 2015, were refinanced for five year terms with
lenders new to Hansteen. HSBC Bank plc has provided a €108 million facility. A €235.0 million facility (the
“Helaba” loan) has been provided by a consortium of lenders including Landesbank Hessen-Thüringen
Girozentrale (Helaba), Natixis Pfandbriefbank AG, SEB AG and various entities managed or advised by AXA
REIM SGP. The combined terms equate to less than 4% per annum gross interest costs, including amortised
fees. The Board believes that in addition to these facilities providing well priced and secure borrowings for
the medium term, the banks involved are likely to be enduring and growing partners for Hansteen’s
continental European business.
Asset management achievements
Asset management platform
Our asset management team now extends to 14 offices across the UK and continental Europe. The team has
performed strongly in 2013 delivering 850 new leases and renewals (2012: 704 leases and renewals),
generating annual rent of £24.6 million (2012: £22.4 million). The team has the skills and experience to meet
occupier requirements and the detailed and effective property management approach has enabled us to
successfully absorb new acquisitions and manage them effectively from day one.
As we have developed the asset management infrastructure, one of our objectives has been to take the
marketing of our properties in-house to improve occupational take up using the knowledge and experience of
our asset managers. An additional benefit associated with this decision has been the decrease in fees paid to
third party marketing agents relative to rent generated from new lettings and lease renewals. In 2013, letting
fees paid were £1.0 million on new lettings and renewals of £24.6 million compared to letting fees of £1.2
million on new lettings and renewals of £22.4 million in 2012.
The team in the UK has grown significantly due to the AIF transaction and we have opened a new office in the
North East of England. We now have teams in London, Glasgow, Leeds, Warrington, Birmingham, Cardiff and
Gateshead. We are delighted that after purchasing the asset management business of Warner a number of
key individuals transferred over to Hansteen and the continuity in the tenant relationships and marketing of
the vacant units coupled with the existing Hansteen management approach has started to show some
excellent early results.
Occupancy
Like-for-like net occupancy (measured by taking the vacant area at the start of the year, adding vacancy on
purchases and then comparing with the vacancy at the end of the year) has improved by 104,000 sq m across
the portfolio under management. This represents 2.5% of the total portfolio under management at 31
December 2013 or 22.2% of the vacant area at the start of the year. Hansteen’s wholly owned properties
have contributed significantly to this excellent performance by improving the like-for-like occupancy by
75,000 sq m (3.4% of the portfolio at 31 December 2013 or 18.6% of the vacant area the start of the year). It
is pleasing to note that for the second year running, all three of our core regions have contributed to this
increase in occupancy.
Property valuation
The value of the total portfolio increased by £46.9 million or 3.2% from December 2012. £12.6 million of this
increase came from the wholly owned portfolio and Hansteen’s share of the valuation gain in the three UK
funds was £8.3 million. Interestingly, at the half year values marginally declined underlining just how dramatic
the improvement in values in the second half of 2013 has been.
The value of the German portfolio increased by €19.0 million or 2.8% with the UK wholly owned portfolio also
increasing by £2.5 million or 2.1%. The Benelux portfolio valuation decreased by €7.2 million or 3.9% with a
decrease in the Netherlands and Belgium offsetting slightly increased values in France. HPUT values have
increased by £4.6 million or 3.6% with HPUTII values increasing by £3.2 million or 4.4%. Since September, AIF
values improved by £26.5 million or 5.8%, the first valuation uplift in AIF in 13 quarters.
Property Acquisitions and Sales
The Group has made a number of significant purchases in 2013 which we believe will produce strong returns
in the coming years. Excluding the acquisition of the stake in Ashtenne Industrial Fund (‘AIF’), £91.1 million of
properties have been acquired in the year at an average initial yield of 10.3%. £62.9 million of these
purchases were wholly owned properties at an average yield of 10.6%, the majority of which were
subsequently transferred to seed HPUTII, the balance were acquisitions by HPUTII.
2013 has been our busiest year yet in terms of property sales with 46 transactions totalling £159.6 million at
an aggregate 9.3% premium to December 2012 book values, an average exit yield of 7.3% and an overall
profit of £10.0 million over December 2012 book value. £110.9 million of these sales were wholly owned
properties producing a profit of £6.2 million. The remaining £48.7 million were co-investment properties
producing a profit of £3.8 million of which Hansteen’s share was £1.3 million.
11 sales were completed in Germany for a total consideration of €28.9 million, generating a profit of €2.1
million. In the second half of the year we sold a vacant 14,000 sq m property at Venlo in south-eastern
Netherlands for €0.8 million and the property at Lyon in east-central France for €2.5 million, both slightly
below valuation.
A significant amount of property has been both purchased and sold from the wholly owned UK portfolio
during 2013. In January, we purchased 32 properties located across England, Wales and Scotland from The
Industrial Trust for £60.0 million. The portfolio comprised 149,000 sq m with a vacancy rate of 16.0% by floor
area with a rent of £6.1 million per annum reflecting an initial yield of 10.1%. Over the year we sold £82.8
million generating a profit of £4.7 million. In May 2013, approximately £49.0 million of the properties in The
Industrial Trust portfolio were used to seed the launch of HPUTII. Additionally, £33.9 million of property was
sold in 12 different transactions at £2.7 million above December 2012 valuation and at an average yield of
5.2%.
HPUT had a particularly active year completing a total of 14 sales for £41.9 million at an average yield of 6.1%
and generating a profit to the fund of £3.5 million. Since taking control of the AIF portfolio, three sales have
completed for a total consideration of £4.1 million generating profits of £0.1 million over valuation.
HPUTII exchanged contracts at the end of January for the acquisition of a portfolio comprising 17 industrial
estates from Industrial Property Investment Fund (‘IPIF’). 16 of these completed on 28 th February 2014 (£41.2
million) and one of the properties (£1.1 million) will complete once an outstanding purchase condition has
been satisfied by the vendor. The total portfolio reflects a net initial yield of 7.7% rising to 8.25% on
contracted rents. The void rate is 4.7% and we believe the application of our rigorous asset management
model together with the improvement in the occupational market described later will enable us to deliver
rental performance.
Sales are an integral part of the Hansteen business model, realising profits after intensive asset management
and value growth. The Board expects this to continue in 2014 with selective sales in both the UK and
Continental Europe.
Property Portfolio
In total, the portfolio that is owned or co-owned is valued at £1.5 billion, has a rent roll of £134.9 million per
annum, and a vacancy of 16.3%. It comprises 4.1 million sq m with a yield of 8.8% generated from 592 estates
with 5,900 tenants in five different countries. If the portfolio was fully occupied at market rents the rent roll
would be £169.7 million per annum with a yield of 11.0 %. This is the first time that our wholly owned
properties together with our shares of the three UK funds properties (“Hansteen’s share of attributable
property investments”) has exceeded £1 billion in value.
The Group’s wholly owned property portfolio at 31 December 2013 consisted of 2.2 million sq m, a decrease
from 2.3 million sq m at the start of the year due to sales. The portfolio is valued at £849.5 million (2012:
£843.1 million) and has a yield of 8.6% (2012: 8.5%). The performance of the portfolio on a like-for-like basis,
allowing for acquisitions, sales and currency movement has been very positive. Rent has improved by £2.8
million per annum. The passing rent at the start of the year was £71.8 million per annum, the net effect of
sales and acquisitions was a rent reduction of £2.5 million per annum, the gain due to exchange rate
movements was £1.3 million per annum and the closing rent was £73.5 million per annum, a net like-for-like
improvement of 4.0%.
The total value of property owned by the three Funds in which Hansteen had an interest at 31 December
2013 was £688.3 million, an increase of £525.7 million. The portfolio’s now extend to 1.9 million sq m with a
rent roll of £61.5 million per annum and a vacancy of 17.5%.
Within the REIT sector Hansteen’s portfolio is unique both in terms of its yield and diversity. The analysis of the
portfolio at 31 December 2013 is set out in the table below:
No.
props
Built area
Vacant
area
sq m
%
Euros
€m
Sterling
£m
Euros €m
Sterling
£m
%
Passing rent
Value
Yield
Germany
90
1,504,598
12.26%
62.06
51.70
690.88
575.54
8.98%
UK
83
272,391
17.86%
12.28
10.23
150.16
125.10
8.17%
Netherlands, Belgium &
France
43
433,073
24.69%
13.84
11.53
178.74
148.90
7.75%
216
2,210,062
15.39%
88.18
73.46
1,019.78
849.54
8.65%
HPUT*
43
283,561
13.15%
12.61
10.50
157.69
131.36
7.99%
HPUT II*
45
217,842
23.30%
8.45
7.04
92.20
76.80
9.17%
AIF*
288
1,375,322
17.42%
52.73
43.93
576.33
480.11
9.15%
Total under management
592
4,086,787
16.34%
161.97
134.93
1,846.00
1,537.81
8.77%
Total wholly owned
* Figures include 100% of the funds’ portfolio. Hansteen has an investment of 33.3% in HPUT, 33.3% in HPUT
II and 27.5% in AIF.
We set out below, a brief status report on each of our core regions.
Germany
Germany, which accounts for approximately 55% of Hansteen’s share of attributable property investments,
has had another successful year with income, occupancy and value, all showing positive movements. The
passing rent in 2012 was €60.5 million per annum and the net effect of sales and acquisitions during 2013 was
a rent reduction of €1.3 million per annum. The closing rent at 31 December 2013 was €62.1 million per
annum, a net improvement of €2.9 million per annum or a 4.9% improvement in the like-for-like rent roll. The
like-for-like occupancy movement has been equally impressive with the 2013 improvement totalling 25,000
sq m. Occupancy in the second half of 2013 has grown by 58,000 sq m as like-for-like occupancy in Germany
had fallen by 33,000 sq m in H1 2013. The portfolio ended the year with 184,000 sq m vacant, representing
12.3% of the total floor area (2012 vacancy: 13.9%).
UK
The UK portfolio owned or co-owned has increased significantly during the year due to formation of the
second HPUT fund (HPUTII) and the acquisition of the stake in AIF. These two transactions have added over
1.6 million sq m of property with a rent of almost £51.0 million per annum. The total UK portfolio comprises
2.1 million sq m with a rent roll of £71.7 million per annum, a vacancy of 17.5% and a value of £813.4 million.
Hansteen’s proportion of that portfolio is £326.3 million which accounts for 31.1% of Hansteen’s share of
attributable property investments.
UK Wholly Owned
At 31 December 2013, the wholly owned portfolio has a rent roll of £10.2 million per annum and a value of
£125.1 million, representing a yield of 8.2% with a vacancy rate of 17.9%, improved from 26.0% at 31
December 2012. Included within this value are five development sites totalling 78.8 hectares valued at £10.1
million.
The passing rent at the start of the year was £10.3 million per annum, the net effect of sales and acquisitions
was a rent reduction of £1.1 million per annum, and the closing rent was £10.3 million per annum, a net likefor-like improvement of £1.1 million or 11.6%. The improvement in occupancy is the most impressive statistic
with a like-for-like improvement of 44,500 sq m or 54.2% of the vacancy at 31 December 2012.
HPUT
In addition to its wholly owned properties, Hansteen has a one third stake in the Hansteen Property Unit
Trust (HPUT). At 31 December 2013, HPUT owned 283,561 sq m of property with a rent roll of £10.5m, a
vacancy of 13.2%, a value of £131.4 million and a yield on the passing rent of 8.0%.
Performance in terms of both occupancy and rental income has also been good. Like-for-like occupancy has
increased by 26,800 sq m with like-for-like rent improving by £0.15 million per annum. At the end of 2013,
the HPUT had a NAV of £1.18 per unit (£1 par), having produced a distribution of 7.0%. The total return for
2013 was 15.8%.
HPUT II
In May 2013, we announced the launch of the Hansteen UK Industrial Property Unit Trust II (“HPUT II”) in
which Hansteen has a one third stake. The Fund was seeded with approximately £49.0 million of property
from the Hansteen wholly owned portfolio and has the capacity to invest up to approximately £200 million in
UK industrial property. 22 further properties have been added to the portfolio throughout the year bringing
its portfolio to 217,842 sq m with a value at 31 December 13 of £76.8 million, a vacancy of 23.3%, a rent roll
of £7.0 million per annum and a yield on the passing rent of 9.2%.
Like-for-like occupancy has decreased since acquisition by 5,200 sq m with like-for-like rent also falling by
£0.3 million per annum. This decrease is due to three large lease expiries indentified when the properties
were purchased from The Industrial Trust and the UK asset management team are focussing their attention
on these new vacancies to improve both the occupancy and the rent roll.
AIF
Following the announcement, at the end of August, that we were to purchase a significant stake in the AIF,
the portfolio has performed very well under Hansteen management. At the start of the new asset
management contract, the 1.4 million sq m of multi let industrial properties in the UK had over 3,000 units,
on 240 individual estates, with an annual rent roll of £43.5 million and vacancy rate of 18%. At 30 June 2013,
the gross asset value of the properties was £460 million.
Under Hansteen management, we have managed to grow the income and increase the occupancy. Like-forlike occupancy has grown by 7,100 sq m with the like-for-like rent roll improving by £0.7 million per annum.
The like-for-like valuation uplift from 30 September 2013 to 31 December 2013 is £26.5 million or 5.8%. At 31
December 2013, the portfolio was valued at £480.1 million, had a rent roll of £43.9 million per annum and
had a vacancy rate of 17.4%, a yield on the passing rent of 9.1%. As the regional asset management teams
become more familiar with the AIF properties, it is expected that the rent roll will grow further, occupancy
will continue to improve and values will keep on rising during 2014.
Netherlands, Belgium and France
At 31 December 2013, Benelux accounted for approximately 14% of Hansteen’s share of attributable property
investments. In general, 2013 has been a successful year with like-for-like net occupancy improving by 5,100
sq m. The passing rent at 31 December 2012 was €14.9 million and the net effect of sales and acquisitions
was a rent reduction of €0.3 million. The closing rent was €13.8 million per annum, a like-for-like decrease of
€0.8 million per annum.
This reduction is all due to the Netherlands where some significant tenants have vacated their units at lease
expiry. Like-for-like occupancy has decreased by 2,400 sq m. Like-for-like rent has remained broadly flat in
Belgium but with a 7,000 sq m improvement in like-for-like occupancy, the rent roll will improve in early 2014
when various rent concessions due to a number of new lettings come to an end.
After the sale of the property in Lyon, the French portfolio comprises two properties totalling 56,000 sq m
with an annual rent roll of €1.54 million.
Finance
NAV
Net assets attributable to the equity shareholders at 31 December 2013 were £554.7 million (2012: £515.4
million). The increase of £39.3 million in the year arises principally from £58.0 million profit for the year and
£8.2 million gain on foreign currency movements on overseas net assets less the dividends paid of £29.4
million.
There were 641.4 million shares in issue at 31 December 2013 (2012: 638.8 million) with a further 9.9 million
shares under option at exercise prices below the market price at that time giving 651.3 million shares for
dilutive measures (2012: 639.8 million). As at 31 December 2013 IFRS Diluted NAV per share was 85p (2012:
81p) and EPRA NAV per share was 91p (2012: 83p).
Gearing
Net debt increased by £110.2 million during the year to £432.2 million at 31 December 2013 (2012: £325.0
million). The increase of £110.2 million included £16.2 million attributable to the mark-to-market of the
convertible bond with the balance being primarily due to increased net investments in investment properties
and associates and the acquisition of the HBI Netherlands loan.
Excluding the mark-to-market adjustment of the convertible bond, net debt to property value at 31
December 2013 was 49.3% (2012: 38.6%) and net debt to shareholders equity at 31 December 2013 was
75.0% (2012: 62.9%) reflecting our continued policy of maintaining gearing at a prudent level.
As at 31 December 2013 the Group had borrowings of £492.9 million of which £290.0 million was swapped at
an average rate of 2.007% and £98.5 million was capped at an average rate of 4.633%. The average all-in
borrowing rate for the Group at 31 December 2013 was 3.7% (2012: 3.1%).
The aggregate net assets of the associates of the Group at 31 December 2013 were £420.3 million and
aggregate bank loans of £346.0 million which are non-recourse to the Group. The committed undrawn
facilities available to the Associates amount to £8.9 million. The funds drawn under the facilities bear an
average all-in interest rate of 4.4%.
Funding
During the year the Group secured new bank loan facilities of £21.3 million from RBS to finance various UK
properties. The Group subsequently repaid £10.3 million of the bank loans from property sales proceeds
leaving the facility at £11 million, all of which was fully drawn at 31 December 2013.
In September 2013, the Group acquired part of the existing UniCredit loan to Hansteen for €54.0 million
representing a discount of €2.5 million to the face value of the loan. This achieved two objectives; firstly to
reduce the net amount owing to UniCredit which we believed was necessary prior to its refinancing and
secondly to create value for Hansteen when the loan was repaid.
At 31 December 2013, the Group had total bank facilities of £391.8 million, all of which were fully drawn.
Borrowings are in the same currency as the assets against which they are secured. Cash resources at the yearend were £57.8 million.
Subsequent to the year end, both the HBOS facility, which was due to expire in October 2014, and the
UniCredit facility, which was due to expire in February 2015, amounting to €310.6 million in aggregate were
refinanced for five year terms with HSBC and Helaba. The new facilities amounting to €343.0 million in total
were fully drawn in February 2014 and together with the issue of the €100 million convertible bond in 2013
has significantly extended and diversified the Group’s funding facilities.
Of the Group’s £391.8 million bank borrowings at 31 December 2013, 73% was swapped at an average rate of
2.007% with a further 25% capped at an average of 4.6% giving an all in average rate of 3.6%. The weighted
average debt maturity at 31 December 2013 was 1.8 years and the weighted average maturity of hedging was
1.1 years.
Following the recent refinancing, as at 28 February 2014 the Group has £407.5 million of bank borrowings.
45.7% was swapped at an average rate of 1.0% with a further 14.8% capped at an average of 2.6% giving an
all in average rate of 3.7%. The weighted average debt maturity has been extended to 4.4 years and the
weighted average maturity of hedging has been extended to 4.2 years. Analysis of the Group’s bank loan
facilities is set out below:
Bank loan facilities as at 31 December 2013
Lender
Facility
Lloyds Banking Group
FGH
UniCredit *
BNP Paribas Fortis
ING
DG Hyp
Total Euro facilities
Total Euro facilities in GBP
millions
€140.0
€87.7
€170.6
€12.5
€0.9
€2.7
€414.4
£345.1
Amount
undrawn
millions
-
Unexpired
term
Years
0.8
3.3
1.1
8.8
8.2
3.5
All-ininterest
rate
3.2%
3.4%
3.0%
1.7%
3.4%
3.5%
Loan to
value
covenant
75%
78%
85%
70%
Interest
cover
covenant
1.75:1
1.55:1
1.44:1
1.25:1
Lloyds Banking Group
£35.7
Royal Bank of Scotland
£7.0
Royal Bank of Scotland
£4.0
Total facilities
£391.8
* Net of Hansteen’s share of UniCredit bank loan
2.0
4.1
4.1
1.8
4.6%
4.4%
7.7%
3.6%
65%
45%
60%
1.60:1
3.00:1
2.00:1
Unexpired
term
Years
5.0
3.1
5.0
8.6
8.0
3.3
All-ininterest
rate
3.3%
3.4%
4.0%
1.7%
3.4%
3.5%
Loan to
value
covenant
65%
78%
65%
70%
Interest
cover
covenant
2.00:1
1.55:1
1.55:1
1.25:1
1.8
3.9
3.9
4.4
4.6%
4.4%
7.7%
3.7%
65%
45%
60%
1.60:1
3.00:1
2.00:1
Bank loan facilities as at 28 February 2014
Lender
Facility
HSBC
FGH
Helaba
BNP Paribas Fortis
ING
DG Hyp
Total Euro facilities
Total Euro facilities in GBP
millions
€108.0
€87.3
€235.0
€12.3
€0.9
€2.7
€446.2
£367.7
Amount
undrawn
millions
-
Lloyds Banking Group
Royal Bank of Scotland
Royal Bank of Scotland
Total facilities
£29.0
£6.8
£4.0
£407.5
-
In addition to the above bank loan facilities, the Group has a €3.7million finance lease in place to fund a
property in Belgium. As at 31 December 2013, the lease has an unexpired term of 10 years and an interest
rate implicit in the lease of 4.8%. In addition, the Group issued €100.0 million convertible bonds during the
year, expiring 2018, with a coupon rate of 4.0%.
Currency
Hansteen reports its results in Sterling although, at present, approximately 57.5% (£319.0 million or €383.0
million) of its net assets at 31 December 2013 were denominated in Euros.
The Board reviews its currency hedging policy on a regular basis. The current policy can be summarised as:



Hedging instruments are used to cover a substantial proportion of Group Euro net assets and
estimated net Euro income for the short-term.
Hedges are implemented at levels which the Board believe are cost effective.
Hedging is employed as an insurance policy against the impact of a significant fall in the value of the
Euro against Sterling rather than a means to speculate for profit.
The Group’s investments in Europe are partly matched with Euro borrowings and to that extent there is a
natural currency hedge. To mitigate the risk of a significant fall in the Sterling value of the portfolio and the
resulting fall in the NAV caused by a weakening Euro, the Group has €200 million currency options at an
average exchange rate of €1.2372 representing 52.2% of the current Euro denominated net assets. These
options expire in June 2014.
As cover for Euro income, the Group has hedged €70 million net Euro income with four options expiring at
sixth monthly intervals on 30 June 2014, 31 December 2014, 30 June 2015 and 31 December 2015. Each
option is to put €17.5 million and call for GBP at an exchange rate of €1.3/£1. The options expiring on 30 June
2015 and 31 December 2015 were entered into during the year. The aggregate premiums for these options
were £0.4 million.
The Markets
In each region in which we operate, two types of market demand are relevant; firstly tenant demand as this
governs the strength and sustainability of our rent rolls and secondly investor demand as this provides the
backdrop to our buying and selling activity.
During the summer of 2013, we recorded an improvement in investor sentiment particularly in the UK and
therefore prepared a number of properties for sale during the second half of the year. This sales programme
culminated in £76.4 million of assets being sold in the final quarter of 2013 predominantly to UK Institutions
and in nearly all cases at prices materially above the most recent valuation. Early evidence in 2014 suggests
that UK appetite for regional industrial property remains high both from Institutional purchasers as well as
national and local property companies who are buoyed by the improvement in occupier confidence and
access to liquidity.
Whilst it appears that this investor demand is driven to some extent by weight of money, all the Hansteen UK
offices are reporting increased occupier enquiries and take-up which in previous cycles would be the
precursor to rental growth.
In Germany the occupier market has been strong since the end of 2010 but our offices in Germany are
reporting increased enquiries and further improving demand. Given that in Germany the gulf between
current light industrial rents and that which would be necessary to justify development is even larger than in
the UK, it is likely that continued occupational strength will feed through into increasing rents at some stage.
Investment demand for light industrial property in Germany has not yet shown the dramatic pick up we have
seen in the UK but there are signs that it is on a similar trajectory albeit 6 to 12 months behind.
In the Benelux, there are early signs of investor activity and new bank lending in the light industrial sector
after several years of almost total investor inactivity. It remains to be seen whether this improvement in
sentiment will be sustained. To some extent this will depend on whether the occupational market also starts
to materially improve. Whilst there are very early indications that this may be the case, particularly in
Belgium, we have yet to see a sustained increase in occupational demand in the Netherlands.
Outlook
During the last few years we have focused on buying well and consistently growing our earnings and
dividends. Throughout that period however, we have always believed that there would come a time in the
cycle where our approach would produce value growth to enhance those income returns.
2013 has been a year in which we have seen the Hansteen business model prove its value. We have
highlighted the significant number of properties purchased at a low point (in terms of occupancy, value and
management) as well as the intensive management approach that we employ through a well establish
regional network of asset managers. Both of these factors are key to the business model and have enabled us
to sustainably increase rental yield and grow values. We have also been able to realise some of this added
value in 2013 with opportunistic sales across all of our regions.
The second half of 2013 saw the investment and funding markets change significantly for the better following
five years of decline and poor liquidity. This is particularly true in the UK with growing signs that the
investment market in Germany will follow a similar path in time. At the same time, to a lesser or greater
extent, in each of our regions the occupational market is improving. Having focused on buying properties with
vacancies the combination of our successful asset management and the improving markets means that
despite showing value growth in 2013 the yield of our portfolio was higher in December 2013 than it was in
December 2012. Furthermore, although we have materially improved occupancy levels there is still a
significant vacant element with the potential to add both income and value. Accordingly, we are well
positioned to benefit from improving market backdrop and expect 2014 to be a very active and successful
one for Hansteen.
Morgan Jones and Ian Watson
Joint Chief Executives
Richard Lowes
Finance Director
10 March 2014
Principal Risks and Uncertainties
The Board recognises that risk management is essential for the Group to achieve its objectives. Whilst our
principal risks have remained unchanged over the course of the year, senior management staff and the Board
regularly consider the significant risks, which it believes are facing the Group, identify appropriate controls
and if necessary instigate action to improve those controls.
There will always be some risk when undertaking property investments but the control process is aimed at
mitigating and minimising these risks where possible. The key risks identified by the Board, the steps taken to
mitigate them and additional commentary is as follows:


Changes in the general economic environment expose the Group to a number of risks including falls
in the value of its property investments, loss of rental income and increased vacant property costs
due to the failure of tenants to renew or extend leases as well as the potential for tenants to become
bankrupt. The Board believes these risks are reduced due to its policy of assembling a portfolio with
a wide spread of different tenancies in terms of actual tenants, industry type and geographical
location as well as undertaking thorough due diligence on acquisitions. The level of exposure to
individual tenants is regularly monitored to ensure they are within manageable limits. Rent deposits
or bank guarantees are requested where appropriate to mitigate against the effect of tenant
defaults. Where possible, purchases are achieved at low capital values and with due investigation of
tenant finances.
Over-borrowing by the Group with inability to meet repayment requirements, insufficient credit
facilities, significant interest rate increases or facility covenant breaches represents a risk to the
Group. In response to these risks Hansteen maintains a prudent approach to its borrowing levels by



seeking to maintain headroom within its debt facility covenants and have cash resources that exceed
immediate loan repayment requirements. The Board actively monitors current debt and equity levels
as well as considering the future levels of debt and equity required to sustain the business. Current
and projected compliance with loan covenants are monitored and compliance certificates are
prepared on a regular basis. For all money borrowed consideration is given to procuring the
appropriate hedging instruments to protect against increases in interest rates.
By investing in property in mainland Europe the Group is exposed to a foreign currency exchange
rate risk. In response to this risk the Group’s borrowings in Europe are in Euro denominated loan
facilities and therefore, to the extent that investments are financed by debt, a self hedging
mechanism is in place. In relation to the equity element of the Group’s Euro investments the Board
monitors the level of exposure on a regular basis and considers the level and timing of when to take
out the appropriate hedging instruments to cover this exposure. There is also a risk that one or more
of the countries that the Group operates in could leave the Euro which may affect the nature of the
Group’s loans and derivatives or introduce new volatility and currency exposures for the Group to
manage.
In addition to the need to act as a responsible landlord, there may be occasions when pollution on a
site owned by a property investment company becomes its responsibility and risk of non compliance
with laws and regulations is apparent. Each acquisition undertaken by the Group includes an
environmental report from a specialist consultancy. These reports may highlight the need for further
investigation and in some cases remediation. The Group’s policy is then to either undertake such
investigations or remediation or potentially reject the purchase as no longer viable.
Loss of REIT status and payment of additional corporation tax would arise from a breach of REIT
compliance requirements. The risk of a breach of certain limits imposed by REIT legislation is
mitigated through regular review of the Group’s actual and forecast performance against REIT
regime requirements.
Corporate and Social Responsibility
Hansteen is committed to being socially and environmentally responsible. It is Hansteen’s policy to comply
with environmental legislation and relevant codes of practice. Hansteen seeks to reduce emissions and
pollution, where possible. Details of our Greenhouse Gas emissions are detailed in the Directors’ Report.
Hansteen supports local and national charities and regular events are held in each office to support charitable
causes. We have supported staff who voluntarily gave up their time to teach children from local schools
during working hours. Additionally, a work experience programme has been established with a local school in
London.
Human Rights
Hansteen respects Human Rights and aims to provide assurance to internal and external stakeholders that we
are committed to human rights and the principles of the Universal Declaration of Human Rights.
We are committed to creating and maintaining a positive and professional work environment that reflects
and respects the basic rights of freedom to lead a dignified life, free from fear or want, and where
stakeholders are free to express their independent beliefs. Our employment policies and practices reflect a
culture where decisions are made solely on the basis of individual capability and potential in relation to the
needs of the business.
Equality and Diversity
Hansteen is a company where every employee, current and potential candidate has the opportunity to
achieve their full potential, and where people treat each other with dignity and respect. In our increasingly
competitive business environment we understand that the performance and engagement of our employees is
central to our business success. Our employment policies and practices reflect a culture where decisions are
made solely on the basis of individual capability and potential in relation to the needs of the business.
We recognise the value of a diverse workforce in helping us understand the needs of our large and diverse
tenant base and that this can help ensure we tailor our services accordingly, support rental growth and
tenant retention. We operate in increasingly diverse communities both in the UK and in the other territories;
our diversity is evident in our workforce and our tenants, suppliers and other stakeholders.
The Board is keen to ensure that Hansteen benefits from the highest quality Board comprising individuals
with an appropriate balance of skills and experience. We are proud to be a diverse business at all levels.
As at 31 December 2013, the composition of Hansteen’s employees, including both Executive and NonExecutive Directors, was as follows:
Number
Male
Female
Directors – Group (including Non-Executive Directors)
8
Senior managers and Company Secretary (excluding Directors)
4
2
All staff (excluding Directors and senior managers and Company Secretary)
44
38
Responsibility statement of the directors on the annual report
The responsibility statement has been prepared in connection with the Company’s full Annual Report for the
year ended 31 December 2013. Certain parts of the Annual Report are not included in this announcement, as
described in note 1.
Responsibility statement
We confirm that to the best of our knowledge:
 the financial statements, prepared in accordance with International Financial Reporting Standards as
adopted by the European Union, give a true and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings included in the consolidation taken as a
whole; and
 the Chairman’s Statement and the Joint Chief Executives’ Review and Finance Review include a fair
review of the development and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
By order of the Board
Ian Watson and Morgan Jones
Joint Chief Executives
10 March 2014
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER
2013
Note
Revenue
2
2
2
Cost of sales
Gross profit
Other operating income
Administrative expenses
Share of results of associates
Operating profit before gains on investment properties and sale of subsidiaries
Profit on sale of investment properties
Profit on sale of subsidiary
Fair value gains on investment properties
Operating profit
Finance income
11
Finance costs
6
6
Profit before tax
Tax
7
Profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Earnings per share
Basic
Diluted
9
9
2013
£’000
82,961
2012
£’000
77,257
(13,801)
(19,704)
69,160
(19,768)
32,402
81,794
4,883
1,308
12,556
100,541
6,616
57,553
1,799
(14,604)
1,907
46,655
855
56
18,940
66,506
1,809
(41,817)
65,340
(7,290)
58,050
(22,119)
46,196
(6,610)
39,586
58,001
49
58,050
39,408
178
39,586
9.1p
6.2p
9.0p
6.2p
All results derive from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 DECEMBER 2013
Profit for the year after tax
Other comprehensive income/(expense):
Exchange differences arising on translating foreign operations
Exchange differences recycled to income statement on disposal of subsidiary
Total other comprehensive income/(expense) for the year, net of income tax
Total comprehensive income for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
All components of other comprehensive income/(expense) will be recycled to profit and loss.
BALANCE SHEET AS AT 31 DECEMBER 2013
2013
£’000
58,050
2012
£’000
39,586
8,233
8,233
66,283
(6,062)
(171)
(6,233)
33,353
66,215
68
66,283
33,195
158
33,353
Note
Non-current assets
Goodwill
Property, plant and equipment
Investment property
Investment in subsidiary undertakings
Investment in associates
Deferred tax asset
Derivative financial instruments
10
11
Current assets
Investment properties held for sale
Trading properties
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
10
12
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Derivative financial instruments
Borrowings
Obligations under finance leases
13
Non-current liabilities
Borrowings
Obligations under finance leases
Derivative financial instruments
Deferred tax liabilities
13
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Translation reserves
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interest
Total equity
2013
£’000
2012
£’000
2,261
291
834,863
124,742
1,673
372
964,202
1,959
208
821,372
32,741
2,228
5,027
863,535
4,605
10,068
63,279
1,641
57,779
137,372
1,101,574
10,948
10,765
21,107
176
118,916
161,912
1,025,447
(31,255)
(2,144)
(471)
(125,457)
(178)
(159,505)
(41,704)
(2,284)
(4,194)
(165)
(48,347)
(364,438)
(2,864)
(4,470)
(15,298)
(387,070)
(546,575)
554,999
(436,590)
(2,982)
(10,098)
(11,073)
(460,743)
(509,090)
516,357
64,050
114,157
327
32,119
344,004
554,657
342
554,999
63,883
112,731
23,905
314,862
515,381
976
516,357
Approved by the Board of Directors and authorised for issue on 10 March 2014.
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2013
Group
Balance at 1 January 2012
Dividends
Share-based payments
Profit for the year
Other comprehensive expense for the year
Balance at 31 December 2012
Dividends
Share-based payments
Share
capital
£’000
63,883
63,883
-
Share
premium
£’000
112,731
112,731
-
Translation
Other
reserves reserves
£’000
£’000
30,118
(6,213)
23,905
-
Retained
earnings
£’000
301,854
(26,831)
431
39,408
314,862
(29,385)
780
Total
£’000
508,586
(26,831)
431
39,408
(6,213)
515,381
(29,385)
780
Noncontrolling
interest
£’000
818
178
(20)
976
-
Total
£’000
509,404
(26,831)
431
39,586
(6,233)
516,357
(29,385)
780
Group
Share options exercised
Shares issued as consideration for minority
interest
Profit for the year
Other comprehensive income for the year
Balance at 31 December 2013
Translation
Other
reserves reserves
£’000
£’000
Retained
earnings
£’000
Noncontrolling
Total
interest
£’000
£’000
Share
capital
£’000
Share
premium
£’000
130
1,088
-
-
(254)
964
-
964
37
64,050
338
114,157
8,214
32,119
327
327
58,001
344,004
702
58,001
8,214
554,657
(702)
49
19
342
58,050
8,233
554,999
Total
£’000
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2013
Net cash inflow from operating activities
Investing activities
Interest received
Dividends received
Investments in subsidiaries
Investments in associates
Acquisition of business
Sale of subsidiary
Additions to property, plant and equipment
Additions to investment properties
Proceeds from sale of investment properties
Loan acquired
Distributions received from associates
Net cash used in investing activities
Financing activities
Dividends paid
Proceeds from issue of shares at a premium net of expenses
Repayments of obligations under finance leases
New borrowings raised (net of expenses)
Bank loans repaid (net of expenses)
Additions to derivative financial instruments
Proceeds on disposal of derivative financial instruments
Settlement of derivative financial instruments
Net cash generated by/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of changes in foreign exchange rates
Cash and cash equivalents at end of year
Note
14
2013
£’000
33,476
2012
£’000
39,398
1,192
(65,219)
(267)
23,494
(209)
(99,535)
63,165
(36,563)
3,481
(110,461)
1,523
979
(80)
(72,158)
31,720
1,529
(36,487)
(28,961)
963
(176)
189,463
(144,368)
(389)
16,532
(60,453)
118,916
(684)
57,779
(26,831)
(158)
6,674
(21,572)
(11,053)
9,202
(1,936)
(45,674)
(42,763)
162,503
(824)
118,916
NOTES TO THE FINANCIAL STATEMENTS
1. General information
Hansteen Holdings PLC (‘the Company’) is a company which was incorporated in the United Kingdom and registered in
England and Wales on 27 October 2005. The Company is required to comply with the provisions of the Companies Act
2006. The address of the registered office is 6th Floor, Clarendon House, 12 Clifford Street, London W1S 2LL.
The Company together with its subsidiaries (‘the Group’) principal activity is investing in mainly industrial properties in
Continental Europe and the United Kingdom.
These financial statements are presented in Pounds Sterling because that is the currency of the primary economic
environment in which the Company operates. Foreign operations are included in accordance with the policies set out
below.
Basis of preparation
The financial information set out in these condensed financial statements does not constitute the Company's statutory
accounts for the years ended 31 December 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012
have been delivered to the Registrar of Companies and those for 2013 will be delivered following the company's annual
general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3)
Companies Act 2006.
The statutory accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted
for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation and with those parts of the
Companies Act 2006 that are applicable to companies reporting under IFRS. The Group has applied all accounting
standards and interpretations issued by the International Accounting Standards Board and International Financial
Reporting Interpretations Committee as endorsed by the EU relevant to its operations and effective for accounting periods
beginning on 1 January 2013.
Subject to changes of accounting policy noted below, the accounts are prepared on the basis of the accounting policies as
set out in the previous annual financial statements.

Annual Improvements to IFRSs: 2009-2011

Annual Improvements to IFRSs
Cycle (May 2012)

Amendments to IFRS 1 (March 2012)

Government Loans

Amendments to IFRS 7 (Dec 2011)

Disclosures – Offsetting Financial Assets and Financial Liabilities

IAS 19 (revised June 2011)

Employee Benefits

IFRS 13

Fair Value Measurement

IFRIC 20

Stripping Costs in the Production Phase of a Surface Mine
2. Revenue and cost of sales
An analysis of revenue and cost of sales is as follows:
Investment property rental income
Trading property sales
Property management fees
Revenue
Direct operating expenses relating to investment properties that generated rental income
Direct operating expenses relating to investment properties that did not generate rental income
Direct operating expenses
Cost of sales of trading properties
Cost of sales
Gross profit
2013
£’000
78,422
1,360
3,179
82,961
(12,247)
(175)
(12,422)
(1,379)
(13,801)
69,160
2012
£’000
66,780
8,758
1,719
77,257
(11.228)
(288)
(11,506)
(8,198)
(19,704)
57,553
Including interest income of £1,262,000 (2012: £1,495,000) total revenue was £84,223,000 (2012: £78,752,000).
3. Normalised Income Profit and Normalised Total Profit
Normalised Income Profit and Normalised Total Profit are adjusted measures intended to show the underlying earnings of
the Group before fair value movements and other non-recurring or non-cash one-off items. A reconciliation of the
Normalised Income Profit and Normalised Total Profit reconciled to the profit before tax prepared in accordance with IFRS
rules is set out below.
Investment property rental income
Direct operating expenses
Property management fees
Administrative expenses
Net interest payable
Normalised Income Profit
Profit on sale of investment properties
Profit on sale of trading properties
Profit on sale of subsidiary
Direct costs relating to trading properties
Group
£’000
78,422
(12,422)
3,179
(16,851)
(16,634)
35,694
4,883
26
1,308
(45)
2013
Share of
associate
£’000
8,422
(1,332)
(1,088)
(2,344)
3,658
748
-
Total
£’000
86,844
(13,754)
3,179
(17,939)
(18,978)
39,352
5,631
26
1,308
(45)
Group
£’000
66,780
(11,506)
1,719
(14,604)
(13,747)
28,642
855
610
56
(50)
2012
Share of
associate
£’000
4,526
(836)
(592)
(898)
2,200
150
-
Total
£’000
71,306
(12,342)
1,719
(15,196)
(14,645)
30,842
1,005
610
56
(50)
Total profits on sale of investment
and trading properties
Other operating income
Normalised Total Profit
Negative goodwill recognised on acquisition
Acquisition and reorganisation costs
Fair value gains/(losses) on investment properties
Issue costs of convertible bond
Change in fair value of currency options
Change in fair value of interest rate swaps and caps
Change in fair value of convertible bond
Foreign exchange (losses)/(gains)
Share of associate’s tax charge
Profit before tax
6,172
41,866
330
(3,247)
12,556
(1,639)
(3,603)
5,354
(14,495)
(4,184)
32,938
748
61
4,467
19,313
8,259
364
(1)
32,402
6,920
61
46,333
19,643
(3,247)
20,815
(1,639)
(3,603)
5,718
(14,495)
(4,184)
(1)
65,340
1,471
1,799
31,912
18,940
150
2,350
(323)
1,621
1,799
34,262
18,617
(6,877)
314
44,289
(119)
(1)
1,907
(6,996)
314
(1)
46,196
Negative goodwill recognised on acquisition relates to an adjustment to the purchase price of the Spencer group
(£330,000) and the gain recognised upon investing in the Ashtenne Industrial Fund Unit Trust (£19,313,000).
Acquisition and reorganisation costs relate to the costs of integrating the asset management business of Warner Estate
Holdings plc.
4. Operating segments
Segment revenues and results
The Group's reportable segments are determined by geographic location, which represents the information reported to
the Group's Directors for the purposes of resource allocation and assessment of segment performance. A segment’s result
consists of its gross profit as detailed for the Group in note 2. Administrative expenses and net finance costs are managed
as central costs and are therefore not allocated to segments. Gains/(losses) on investment properties by segment is also
presented below.
Belgium
France
Germany
Netherlands
UK
Total segment result
Other operating income
Administrative expenses
Share of results of associate
Operating profit before gains/(losses) on investment properties
Gains/(losses) on investment properties by segment:
Belgium
France
Germany
Netherlands
UK
Total gains on investment properties
Profit on disposal of investment properties
Profit on sale of subsidiary
Operating profit
Net finance costs
Profit before tax
Revenue
2013
£’000
1,899
1,702
51,971
9,241
18,148
82,961
Result
2013
£’000
1,425
1,658
44,218
7,843
14,016
69,160
(19,768)
32,402
81,794
(1,491)
170
16,109
(4,763)
2,531
Revenue
2012
£’000
1,729
1,327
44,668
8,697
20,836
77,257
(633)
550
15,414
392
3,217
12,556
4,883
1,308
100,541
(35,201)
65,340
Segment assets
For the purposes of monitoring segment performance and allocated resources between segments, the Directors monitor
the investment and trading properties attributable to each segment. All assets are allocated to reportable segments with
the exception of investments in associates and elements of cash, derivatives and tax balances that are managed centrally.
2013
Result
2012
£’000
1,193
1,200
38,092
7,285
9,783
57,553
1,799
(14,604)
1,907
46,655
18,940
855
56
66,506
(20,310)
46,196
Belgium
France
Germany
Netherlands
UK
Total segment assets
Unallocated assets
Total assets
Investment
properties*
£’000
25,534
12,496
575,542
110,871
115,025
839,468
Trading
properties
£’000
10,068
10,068
Total
properties
£’000
25,534
12,496
575,542
110,871
125,093
849,536
Other
assets
£’000
2,777
2,859
26,461
3,450
139,840
175,387
Total
assets
£’000
28,311
15,355
602,003
114,321
264,933
1,024,923
76,651
1,101,574
Additions
to
investment
properties
£’000
259
19,034
163
60,797
80,253
Noncurrent
assets
£’000
27,242
12,496
574,867
110,962
236,140
961,707
2,495
964,202
2012
Investment
properties*
£’000
26,727
14,107
550,159
113,382
127,945
832,320
Belgium
France
Germany
Netherlands
UK
Total segment assets
Unallocated assets
Total assets
* Includes investment properties held for sale.
Trading
properties
£’000
10,765
10,765
Total
properties
£’000
26,727
14,107
550,159
113,382
138,710
843,085
Other
assets
£’000
2,875
1,101
22,461
3,509
10,776
40,722
Total
assets
£’000
29,602
15,208
572,620
116,891
149,486
883,807
141,640
1,025,447
Additions
to
investment
properties
£’000
171
69,352
194
18,463
88,180
Noncurrent
assets
£’000
27,757
14,107
540,805
113,555
160,975
857,199
6,336
863,535
5. Profit on disposal of subsidiary
On 24 May 2013, the Group disposed of two thirds of its interest in a subsidiary which resulted in a gain of £1,308,000.
The Group retains a stake of one third of the fund and has accounted for this share as an associate.
6.
Net finance costs
Interest receivable on bank deposits
Other interest receivable
Interest income
Interest payable on borrowings
Interest payable on obligations under finance leases
Other interest payable
Net interest expense
Issue costs of convertible bond
Change in fair value of currency options
Change in fair value of interest rate swaps and caps
Change in fair value of convertible bond
Foreign exchange (losses)/gains
Net finance costs
Finance income
Finance costs
Net finance costs
7.
2013
£’000
436
826
1,262
(16,094)
(71)
(1,731)
(16,634)
(1,639)
(3,603)
5,354
(14,495)
(4,184)
(35,201)
6,616
(41,817)
(35,201)
2012
£’000
1,166
329
1,495
(14,961)
(141)
(140)
(13,747)
(4,752)
(2,125)
314
(20,310)
1,809
(22,119)
(20,310)
2013
£’000
2012
£’000
Tax
UK current tax
(Credit)/charge on net income of the current year
Credit in respect of prior years
Foreign current tax
On net income of the current year
(Credit)/charge in respect of prior years
Total current tax
Deferred tax
Total tax charge
(10)
(547)
(557)
113
(21)
92
3,202
(19)
3,183
2,626
4,664
7,290
2,041
950
2,991
3,083
3,527
6,610
UK Corporation tax is calculated at 23.25% (2012: 24.50%) of the estimated assessable profit for the year. Taxation for
other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The tax charge for the year can be reconciled to the profit per the income statement as follows:
Profit before tax
Tax at the UK corporation tax rate of 23.25% (2012: 24.50%)
Tax effect of:
UK tax not payable due to REIT exemption
Foreign exchange differences
Deferred tax assets not recognised
Effect of different tax rates in overseas subsidiaries
Income/expenses that are not in taxable profit
Change in deferred tax due to change in tax rate
Other
Adjustment in respect of prior years
Tax charge for the year
2013
£’000
65,340
15,192
2012
£’000
46,196
11,318
(4,193)
(10)
579
(4,213)
354
76
147
(642)
7,290
(2,269)
113
(938)
(2,589)
(180)
99
73
983
6,610
The Group elected to be treated as a UK REIT in 2009 following admission to the Official List. The UK REIT rules exempt the
profits of the Group’s property rental business from UK corporation tax. Gains on UK properties are also exempt from tax
provided they are not held for trading. The Group’s UK activities are otherwise subject to UK corporation tax. To remain a
UK REIT there are a number of conditions to be met in respect of the principal company of the Group, the Group’s
qualifying activity and its balance of business which are set out in the UK REIT legislation in the Corporation Tax Act 2010.
8.
Dividends
Amounts recognised as distributions to equity holders in the period:
Second dividend for the year ended 31 December 2012 of 2.7p (2011: 2.4p) per share
Interim dividend for the year ended 31 December 2013 of 1.9p (2012: 1.8p) per share
2013
£’000
2012
£’000
17,247
12,138
29,385
15,334
11,497
26,831
As a REIT, the Company is required to pay Property Income Distributions (‘PIDs’) equal to at least 90% of the Group’s
exempted net income, after deduction of withholding tax at the basic rate (currently 20%). £11,882,000 of the dividends
paid during the year ended 31 December 2013 is attributable to PIDs (2012: £6,133,000).
9. Earnings per share and net asset value per share
The European Public Real Estate Association (EPRA) has issued recommended bases for the calculation of certain earnings
per share (EPS) information. Diluted EPRA EPS is reconciled to the IFRS measure in the following table.
2013
2012
Weighted
Weighted
average
Earnings
average
number of
per
number of
Earnings
shares
share
Earnings
shares
£’000
000’s
pence
£’000
000’s
Normalised Income Profit
638,977
6.2
30,842
638,833
39,352
Normalised Total Profit
638,977
7.3
34,262
638,833
46,333
Basic EPS
58,001
638,977
9.1
39,408
638,833
Earnings
per
share
pence
4.8
5.4
6.2
Dilutive share options
Diluted EPS
Adjustments:
Revaluation losses/(gains) on investment properties
Profit on the sale of investment properties
Profit on sale of trading properties
Profit on sale of subsidiary
Cost of acquiring subsidiaries
Gain on acquisition of associate
Issue costs of convertible bond
Change in fair value of derivatives
Change in fair value of convertible bond (excluding
foreign exchange)
Adjustment in respect of associates
Income tax on the above items
Diluted EPRA EPS
58,001
4,222
643,199
(0.1)
9.0
39,408
(12,556)
(4,883)
19
(1,308)
(330)
(19,313)
1,639
(1,751)
(18,940)
(855)
(560)
(56)
6,877
16,503
(9,371)
5,276
31,926
292
4,166
30,332
643,199
5.0
99
638,932
638,932
6.2
4.7
The calculations for net asset value (NAV) per share are shown in the table below:
Basic NAV
Unexercised share options
Diluted NAV
Adjustments:
Goodwill
Fair value of interest rate derivatives
Adjustments in respect of associates
Mark-to Market of convertible bond
Deferred tax
Diluted EPRA NAV
Equity
shareholders’
funds
£’000
554,657
249
554,906
(2,261)
4,789
472
16,194
13,503
587,603
2013
Number Net asset
Equity
of
value shareholders’
shares per share
funds
000’s
pence
£’000
641,477
86
515,381
4,446
681
645,923
86
516,062
2012
Number
of
shares
000’s
638,833
1,000
639,833
Net asset
value
per share
pence
81
81
(1,959)
9,532
8,868
532,503
639,833
83
645,923
91
10. Investment property
At 1 January
Additions – direct property purchases
– capital expenditure
Lease incentives
Letting costs
Revaluation
Disposals
Transfer to investment property held for sale
Exchange adjustment
At 31 December
2013
£’000
821,372
62,738
17,486
1,684
679
12,556
(91,702)
(4,605)
14,655
834,863
2012
£’000
762,143
77,646
10,495
645
18,940
(22,385)
(10,948)
(15,164)
821,372
Investment property held for sale:
At 1 January
Additions - capital expenditure
Disposals
Transfer from investment property
Exchange adjustment
At 31 December
10,948
29
(11,427)
4,605
450
4,605
12,452
39
(12,105)
10,948
(386)
10,948
Included within the property valuation is £2,503,000 (2012: £2,843,000) in respect of tenant lease incentives granted.
Investment property includes £3,017,000 (2012: £2,989,000) property held under finance leases.
Properties classified as held for sale at 31 December 2013 represent properties that were actively marketed as at the year
end and have subsequently been sold, or agreements for their sale have been entered into.
All investment properties are stated at fair value as at 31 December and have been valued by independent professionally
qualified external valuers; DTZ, Jones Lang LaSalle or Knight Frank LLP. The valuations have been prepared in accordance
with the RICS Valuation – Professional Standards 2012, published by The Royal Institution of Chartered Surveyors and with
IVA1 of the International Valuation Standards.
The valuations are based on a number of assumptions, the significant ones of which are the appropriate discount rates,
estimates of future rental income and capital expenditure. Rental income and yield assumptions are supported by market
evidence where relevant.
The Group has pledged certain of its investment properties to secure bank loan facilities and a finance lease granted to the
Group.
In accordance with IFRS 13, the Group’s investment property has been assigned a valuation level in the fair value hierarchy.
The fair value hierarchy gives the highest priority to quoted prices in actives markets for identical assets (Level 1) and the
lowest priority to unobservable inputs (Level 3). All of the Group’s investment property as at 31 December 2013 is
categorised as Level 3. Details of inputs used in the fair value measurement can be found in the Strategic Report. An
increase in passing rent and a decrease in discount rate would increase the valuation.
As at 31 December 2013, the Group had entered into contracts for £4 million of building works that were not complete.
11. Investment in associates
Cost and net book value:
Balance at 1 January 2013
Investment in associates
Share of results of associates
Distributions received
Distributions accrued
Less share of profit on properties sold to associates
At 31 December 2013
2013
£’000
2012
£’000
32,741
64,534
32,402
(2,932)
(1,669)
(334)
124,742
32,852
1,907
(1,529)
(489)
32,741
On 24 May 2013, the Group disposed of 66.7% of its holding in Hansteen UK Industrial Property Unit Trust II, and from that
date has accounted for its holding as an associate. During 2013, the Group acquired a 27.5% stake in Ashtenne Industrial
Fund Unit Trust which in turn has an investment of 50% in the Norwepp Limited Partnership. Norwepp Limited Partnership
has been accounted for as an associate due to the significant influence over Ashtenne Industrial Fund Unit Trust.
The Group has the following interests in associates:
Name of associate
Hansteen UK Industrial Property Unit Trust
Hansteen UK Industrial Property Unit Trust II
Ashtenne Industrial Fund Unit Trust
Norwepp Limited Partnership
Place of
establishment
Jersey
Jersey
Jersey
UK
Ownership
%
33.3
33.3
27.5
13.8
Voting rights
%
30.0
30.0
27.5
13.8
2013
£’000
712,579
74,183
(346,041)
(20,452)
420,269
2012
£’000
162,595
12,427
(71,934)
(4,869)
98,219
Aggregated amounts relating to associates
Summarised balance sheets
Investment properties
Cash
Borrowings
Other net liabilities
Net assets
2013
£’000
33,436
46,044
2012
£’000
13,580
5,721
2013
£’000
Trade receivables
6,182
Amounts owed by subsidiary undertakings
Amounts owed by related parties
1,732
Other receivables
49,484
Prepayments and accrued income
5,881
63,279
Group trade receivables are shown after deducting a provision for bad and doubtful debts of £3,996,000 (2012:
£4,295,000). The carrying value of trade and other receivables approximates their fair value.
2012
£’000
4,958
0
371
7,964
7,814
21,107
Revenues
Profit
The revenues and profit above relate to the period of ownership by the Group.
12. Trade and other receivables
Other receivables includes £36,458,000 in respect of a loan acquired in December 2013.
13. Borrowings
Bank loans
Convertible bond
Unamortised borrowing costs
Current liability
Non-current liability
The bank loans and convertible bond are repayable as follows:
Within one year or on demand
Between one and two years
Between three and five years
Over five years
Undrawn committed facilities
Expiring after more than two years
Expiring after more than five years
Facility
€140,000,000
€226,284,000
£35,675,000
£6,987,000
€87,727,000
€2,714,000
£4,000,000
€100,000,000
€13,322,000
Drawn
€140,000,000
€226,284,000
£35,675,000
£6,987,000
€87,727,000
€2,714,000
£4,000,000
€100,000,000
€13,322,000
Expiry
October 2014
February 2015
December 2015
August 2016
April 2017
June 2017
January 2018
July 2018
August 2018 to December 2026
2013
£’000
391,183
99,499
(787)
489,895
125,457
364,438
2012
£’000
441,639
(855)
440,784
4,194
436,590
125,631
175,182
184,354
5,515
490,682
4,265
127,345
303,164
6,865
441,639
-
39,580
Covenants
Loan to value
Interest cover
75%
175%
85%*
155%
70%*
160%
45%
300%
80%*
155%
70%
125%
60%
200%
-
*On the €226 million facility the loan to value covenant reduces to 75% in 2014. On the £36 million facility the loan to
value covenant reduces to 65% on 1 January 2014 and further reduces to 55% on 1 January 2015. On the €88 million facility
the loan to value covenant reduces by 2% per year from July 2014.
Security for secured borrowings at 31 December 2013 is provided by charges on property with an aggregate carrying
value of £744 million (31 December 2012: £705 million).
In July 2013, Hansteen (Jersey) Securities Limited issued €100 million of convertible bonds with a coupon of 4.0%. The
bonds will, subject to the satisfaction of certain conditions, be convertible into ordinary shares of the Company. The initial
conversion price was set at a premium of 22.5% above the volume weighted average share price between launch and
pricing, and will be subject to adjustments pursuant to the terms and conditions of the bonds.
Under the terms of the bonds, the Company will have the right to elect to settle any conversion entirely in ordinary shares
of the Company, cash or a combination of shares and cash. If not previously converted, redeemed or purchased and
cancelled, the bonds will be redeemed at par in July 2018.
The €226 million facility is provided to a number of the Company’s subsidiaries by a syndicate of lenders. In September
2013, the Company acquired €56.6 million of the facility from one of the syndicate of lenders. The Company paid for
€54.1 million to acquire the loan. All other disclosures regarding this facility have been made net of the repayment of the
€56.6 million.
Interest rate and currency profile
Euros
Sterling
2013
%
2.34
3.59
2.45
2013
£’000
448,024
42,658
490,682
2012
%
1.8
3.6
2.0
2012
£’000
403,012
38,627
441,639
The Group enters into derivative financial instruments to provide an economic hedge to its interest rate risk. After taking
into account the effect of the interest rate swaps the weighted average interest rates are 3.5% for the Euro borrowings
(2012: 3.0%) and 4.0% for the Sterling borrowings (2012: 3.9%).
14. Notes to the cash flow statement
Profit for the year
Adjustments for:
Share-based payments
Depreciation of property, plant and equipment
Share of profits of associate
Profit on sale of investment properties
Profit on sale of subsidiary
Fair value gains on investment properties
Net finance costs
Tax charge
Operating cash inflows before movements in working capital
Decrease in trading properties
Increase in receivables
Increase in payables
Cash generated from operations
Income taxes (paid)/received
Interest paid
Net cash inflow from operating activities
2013
£’000
58,050
2012
£’000
39,586
780
126
(32,402)
(4,883)
(1,308)
(12,556)
35,201
7,290
50,298
697
(2,743)
4,134
52,386
(2,872)
(16,038)
33,476
431
107
(1,907)
(855)
(56)
(18,940)
20,310
6,610
45,286
6,711
(2,880)
1,709
50,826
2,840
(14,268)
39,398
15. Events after the balance sheet date
A second dividend in respect of the year ended 31 December 2013 of 2.9p per share will be payable on 21 May 2014 to
shareholders on the register on 25 April 2014.
The UK Government has announced that UK corporation tax rates will fall over the period to 1 April 2014 from the current
rate of 23% to 20%. The impact of the proposed rate change is not material to the Group.
In February 2014, the Group secured new financing for both the €140 million facility due to expire in October 2014 and the
€226 million facility which was due to expire in February 2015. Both have been refinanced for five-year terms.